Income Splitting Still the Best Option for Parents

Tax Reform is back in the spotlight. During the next 18 months the opportunity exists to empower parents by allowing income splitting for tax purposes. Parents Choice is reviewing its plans for 2009 and is seeking expressions of support from regional contacts around the country.

If you are willing to distribute newsletters or act as a regional contact for Parents Choice we would like to hear from you. Just email us at parentschoice08@gmail.com

United Future's Tax policy released

Last weekend United Future released its tax reform policy. Party leader, Peter Dunne, set out the key elements of the tax policy: income up to $12,000 taxed at 10%; income between $12,001 and $38,000 taxed at 20%; income above $38,000 taxed at 30%; Income splitting for parents with dependent children; Honoraria for volunteers up to $1,000 to be tax free; and Gift duty to be abolished.

Dunne says that United Future has carefully costed the impact of these policies and in a full year, they would cost $4.5 billion. "Looking at the tax cuts alone for a family on $45,000 a year, from 1 October this year, they will get a tax cut of $33 a fortnight. Under UnitedFuture's plans, the same family would get a tax cut of $45 a fortnight. Couple that with UnitedFuture's income splitting plan, and the tax cut rises to $87 a fortnight." Further details are available at www.unitedfuture.org.nz

Parents' Choice welcomes United Future's reiteration of its support for Income Splitting. We also welcome tax relief for kiwi families who are finding it increasingly difficult to cover the cost of fuel and food price rises. We note that the government's Budget tax policies contained $10billion of tax cuts targeted at low and middle income earners. www.labour.org.nz for more details.
We await with interest the National Party's tax reform plan. www.national.org.nz

Parents could use a tax cut too

This week the government cut the company tax rate to 30 per cent - down from 33 per cent.
“Reducing the company tax rate will allow successful businesses to re-invest a greater share of their profits in new technologies and in further building-up the skill base of employees,” Minister of Finance, Dr Cullen said.

“We expect that lowering of the company tax rate will serve to strengthen the competitiveness of New Zealand-based companies, and that is good for the long-term interests of all New Zealanders,” Minister of Revenue Peter Dunne said.

The cut to the company tax rate to 30 per cent is the first time the company tax rate has been reduced in New Zealand since 1988.

Dr Cullen said that the latest initiative is part of the Labour-led government’s economic transformation package that includes the significant moves on depreciation and other business tax measures announced in 2005, tax credits for R&D and changes to the tax treatment of savings vehicles.

It's good to see that many small and medium sized businesses will get some relief through lower taxes. But what about families relying on one main income? Parents Choice is writing to the various political parties urging them to give greater recognition to the plight of two parent families and to allow income splitting for tax purposes.